Bank of England Governor Mark Carney: Brexit has already hit UK GDP by up to £40bn

The EU has just passed a law that could end the problems with free movement which led to Brexit in the first place

Corporations will no longer be able to undercut local workers by exploiting migrants. Looking beyond Brexit, this law will make a big difference regardless of the option chosen for our future relationship with the EU

Jude Kirton-Darling,Agnes Jongerius
Wednesday 30 May 2018 18:16

Yesterday the European parliament passed a new law that will end the conflation of free movement of people with the undercutting of local workers by EU migrants.

During the 2016 EU referendum campaign, the issue of free movement was front and centre. Remember all those people saying how eastern European workers would come to the UK and work for less, meaning they couldn’t get jobs in their own towns? The EU has finally addressed this issue.

All too often, it's been easier to dismiss such concerns as xenophobic, but in reality these sentiments have been fuelled for years by inadequate labour market rules which have allowed exploitation and the undercutting of wages and conditions.

In the northeast of England, local construction workers have been vocal in their defence of collectively agreed industry rates of pay and against the misuse of extended supply chains to exploit migrant workers and undermine wages and working conditions.

Thus far, exploitative employers have been able to take advantage of out of date legislation regarding so-called “posted workers” – when an employee from one EU member state is sent by their employer to carry out a service in another temporarily. Despite obligations for employers to pay workers the minimum wage of the country in which they are working, loopholes in the legislation and enforcement have allowed undercutting, including the deduction from wages for travel and accommodation. Workers hired locally would normally be entitled to allowances to cover these costs as well as higher rates of pay, according to the National Agreement for the Engineering Construction Industry or 'BlueBook'. This had the consequence of making migrant workers more attractive to employers looking to cut costs, resulting in the undercutting of the local workforce. Periodically, disputes have exploded as a result – at the Lindsey Total oil refinery in 2008 or at the Wilton former-ICI site on Teesside in recent years.

These loopholes have long been the subject of debate in the EU institutions with many of us working for years to close them, however the whole subject is extremely divisive – with employers against trade unions, and eastern member states opposing any reform that is suspected of being protectionist by western EU member states. MEPs have played a key role in brokering an end to the deadlock between member states. Therefore, just the mere fact that a consensus on a reform has been reached is already big news in the EU, and the resulting changes will make a real difference on the ground across Europe and we are proud to support them this week in the European Parliament.

The new rules voted this week in Strasbourg will prevent the exploitation of workers, bringing about equality between posted workers and their local co-workers. Now employers will be obliged to offer equal pay from the start of the posting, as well as the same allowances and reimbursement for travel and accommodation costs.

Considering the importance of free movement in the EU referendum campaign and the potential for constructively responding to concerns about labour exploitation in Leave constituencies, it has been frustrating to witness the Tory government attempt to undermine the deal reached by abstaining in the European Council. Thankfully their feet dragging has proved unsuccessful. Now all EU member states – the UK included – have two years to implement the new rules. Today, we call on the UK government to hastily implement the reforms into UK law so that British workers can benefit from these changes as soon as possible.

During the post-Brexit transition the UK must continue to implement EU legislation in British law. With the transition due to last until at least December 2020, and quite possibly later than that, the revision adopted in the European Parliament this week will in any case have to be applied in the UK. Rather than wait for the last moment, in May 2020, it makes a lot of sense to act quickly so that the benefit of the reform can already be brought to avoid industrial and community disputes like at Lindsey and Wilton.

Looking beyond Brexit, this law will make a big difference regardless of the option chosen for our future relationship with the EU. We can chose to stay in the EU single market with the added reassurance that some of its flaws with respect to the free movement of people have now been fixed. But even if we leave the single market and have to rely on a simple trade deal, some EU workers will continue to be able to come to the UK on a temporary basis because this is a standard feature of all recent EU trade deals. Under this scenario too, enforcing the principle of equal pay for equal work in the same workplace can only benefit everyone involved.

Yesterday’s decision demonstrates both that having a voice in the European Parliament has been vital for British working people, and that Labour’s 20 MEPs and our allies within the European Social Democrats are still hard at work a year out from the next European elections and Brexit. We are fulfilling our promises of cracking down on unscrupulous and exploitative employers, working to make migration fairer for both those at home and from abroad.

If one positive thing came out of the EU referendum it was that politicians here and abroad pulled their fingers out to make the rules fairer and address public concerns about exploitation. It would be a real shame if the UK chose to throw the baby out with the bathwater in a year's time, turning our back on these vital worker protections outside the single market.

Jude Kirton-Darling ia an MEP for the northeast England region for the Labour Party. Agnes Jongerius is an MEP for the Netherlands who drafted the legislation on posted workers